Google Offers Concessions to Europe After Record Antitrust Fine

Image

Packages at a sorting facility near Paris. Google is making concessions related to its online shopping service, after being hit with a record fine by the European Commission.CreditEric Piermont/Agence France-Presse — Getty Images

Google announced concessions on Wednesday to European regulators over its online shopping service, signaling a new willingness by the Silicon Valley company to bow to tightening pressures from governments around the world.

The overhaul came after Google was hit by a record antitrust fine of 2.4 billion euros, or $2.8 billion, over the summer for unfairly favoring its own service over those of its rivals. The penalty, in one of the company’s most important markets, highlights the risks facing Google as it looks to protect its dominant position in online search in Europe and other parts of the world.

Its decision to effectively give competitors a better chance of attracting business in the online shopping sector could also set a precedent, raising the specter of Google being forced to open up more of its search tool to rivals.

Google said the changes would be introduced early on Thursday morning, meeting a deadline to open up its shopping platform to greater competition or potentially face further fines from the European Commission, the European Union’s executive arm. As a result, about a dozen shopping sites from companies besides Google could become more visible and accessible.

“We’re giving comparison shopping services the same opportunity to show shopping ads from merchants on Google’s search results pages as we give to Google Shopping,” Al Verney, a spokesman for Google in Brussels, said.

The fine against Google in June was among the most aggressive moves against an American technology company taken anywhere in the world. It immediately confirmed Europe’s role as the Western world’s toughest regulator of digital services. But it has also prompted criticism of Brussels, which has been accused of unfairly targeting United States businesses, claims European officials deny.

Still, technology has been a focus of Margrethe Vestager, the European Union’s competition commissioner. Along with other investigations into Google, the commission has also opened inquiries into tax avoidance, data privacy and abuse of market position, affecting American household names like Amazon, Apple and Facebook.

In the case of Google, rivals had long complained that the company gave itself an unfair advantage by automatically putting some of its services at the top of so-called specialized search results. Such search products, like restaurant and business reviews, are increasingly lucrative.

Under the plan presented Wednesday, Google will create a stand-alone unit for its shopping service. That unit will remain part of its overall business, but will operate separately and will be subject to regular monitoring by the European Commission. Rival price comparison services, like Germany’s Idealo and a Dutch comparison site called Vergelijk.nl, would earn money from merchants whose products, from refrigerators to electronic gadgets, they are advertising. But they would also pay Google to take up those spaces.

Customers across the 28 members of the European Union, as well as Iceland, Liechtenstein, Norway and Switzerland, will be able to see those price comparison sites taking up the spots at the top of a search page where only Google Shopping had previously appeared.

“Google Shopping will compete on equal terms and will operate as if it were a separate business, participating in the auction in the same way as everyone else,” said Mr. Verney.

The commission has said that Google met its deadline to offer concessions, but has not commented on whether the moves would actually bolster competition. Fines for failing to meet the Thursday deadline could have been as high as 5 percent of the average daily global revenue of Alphabet, Google’s parent company. Google presented its plans to the commission at the end of August, but did not make them public until Wednesday.

Google would like the measure it’s implementing this week to apply narrowly to price comparison shopping services. But it faces complaints from rivals in other sectors as well, and they may see an opportunity for prying open Google’s formidable search platform.

Google already is facing two separate cases in Europe related to Android, its software for mobile devices, and to some of its advertising products. The company denies the accusations.

But even as Europe has pushed ahead with a series of antitrust charges against Google, the company has not faced the same scrutiny from regulators at home, giving cover to United States lawmakers and lobbyists accusing Europe of unfairly targeting American companies.

American lawmakers increasingly worry about the expanding power of technology behemoths and, in particular, the role they may have played in the 2016 election. This shift has opened Google to attacks from both sides of the political spectrum on a wide range of issues, ranging from antitrust to privacy and public disclosure.

The risk of a regulatory crackdown is a significant one facing the company. It maintains a dominant position in online search, making the advertisements that run alongside its search results an indispensable part of marketing on the internet.

Any decision to separate traditional web search from other search-related functions, such as shopping for products, looking for travel bookings or seeking restaurant reviews, could reverse a profitable evolution of the company’s moneymaker.